TaxTMI 
TaxTMI 
2019 (12) TMI 957
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....sh Tiku, Sr. Advocate with Ms. Sarul Jain, Advocate for R-5. JUDGMENT C.HARI SHANKAR, J. 1. We are, in these writ petitions, required to decide whether Respondent No.1 (hereinafter referred to as "CELEBI") could charge demurrage, on the goods imported by the petitioners, which have been stored in the premises of CELEBI. The petitioners assert that no demurrage could have been charged by CELEBI and rely, for the purpose, on Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 (hereinafter referred to as "the Handling of Cargo Regulations"). The dispute pivots, essentially, on the interpretation of the said clause. Applicable legal provisions 2. At the very outset, therefore, we may set out in clause (l) of Regulation 6(1) of the 2009 Regulations, thus: "6. Responsibilities of Customs Cargo Service provider. - (1) The Customs Cargo Service provider shall - ***** (l) Subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or exami....
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.... ***** (2) The imported or export goods may be received, stored, delivered, dispatched or otherwise handled in a Customs area in such manner as may be prescribed and the responsibilities of persons engaged in the aforesaid activities shall be such as may be prescribed." Facts 6. The facts, in all these writ petitions, are similar. For ease of reference, the facts, in WP (C) 7577/2019 may be cited, by way of example. 7. The petitioner, Global Impex, filed a Bill of Entry, dated 3rd May, 2019, for import of unbranded ready-made garments. A request for first check of the consignment was also made. Consequent thereupon, the consignment was, purportedly, subjected to 100% examination. However, on 6th May, 2019, the consignment was put on hold, for further examination, by the Commissioner of Customs (Preventive) (hereinafter referred to as "the Commissioner"). 8. On subsequent examination of the consignment, it was felt that there had been misdeclaration of quantity. Pursuant thereto, vide Panchnama dated 9th May, 2019, the Commissioner seized the consignment and handed it over, to CELEBI for safe custody, vide letter dated 10th May, 2019. The said letter stated....
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....In order to ensure release of the seized goods, the petitioner deposited the entire amount of duty, penalty and redemption fine, as confirmed by the aforesaid Order-in-Original of the Joint Commissioner, on 21st May, 2019. Thereupon, the Deputy Commissioner of Customs (Preventive) (hereinafter referred to as "the Deputy Commissioner (Preventive)"), vide letter of the same date, i.e. 21st May, 2019, wrote to the Deputy Commissioner of Customs, Import Shed, informing him that the entire amount of duty, penalty and redemption fine stood deposited by the petitioner and that, therefore, the Customs was lifting its hold on the imported goods. Accordingly, it was stated, the Commissioner (Preventive) had no objection for release of the goods imported by the petitioner. 13. The petitioner, thereupon, approached CELEBI, seeking release of the aforesaid goods, imported by it. CELEBI, however, refused to release the goods, till the petitioner paid the demurrage that had accumulated on the goods till then. 14. The petitioner assails the said demand, as raised by CELEBI. Reliance has been placed, by the petitioner, on the letter, dated 10th May, 2019 supra, from the Deputy Commissioner (P....
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....April, 1963 till 21st August, 1964, for examination and that the detention was not owing to any fault or negligence on the part of Aminchand. Acting on the basis of the said certificate, the Board of Trustees of the Madras Port (the appellant before the Supreme Court and referred to, hereinafter, as "the Board of Trustees") waived the demurrage, otherwise payable on the goods, during the period of the detention. Aminchand, accordingly, cleared the consignment, on 25th and 27th August, 1964, on payment of harbour dues, cranage charges and demurrage, for the period not covered by the certificate. 18. The Board of Trustees, subsequently wrote, on 27th January, 1965, to the Customs authorities, opining that the detention certificate had been issued, by the Customs authorities erroneously, and requiring that the matter be reconsidered. 19. Vide letter dated 12th April, 1965, the Customs authorities admitted that they had mistakenly issued the detention certificate, as the goods had been detained to examine the issue of compliance with import trade control formalities, and not for examination and assessment. 20. In this scenario, the Board of Trustees contended that, owing to th....
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....ard of Trustees to frame the scale of rates, and the statement of the conditions under which the services, stipulated thereunder, would be performed by the Board of Trustees. Section 50 of the Madras Port Trusts Act required the rates, in respect of goods to be landed, to be paid immediately on landing of the goods, and the rates, in respect of goods to be removed from the premises of the Port Trust, to be paid before the goods were removed. Section 51 conferred a lien, on the Board of Trustees, on the goods, till payment was made thereon, and empowered the Board of Trustees to seize and detain the goods, till that time. This lien was, by Section 52 of the Madras Port Trusts Act, accorded priority over all other liens and claims, except for general average and the shipowners' lien for freight and other charges. Section 56 empowered the Board of Trustees to, in the event of nonpayment of its dues, sell the goods by public auction. 27. Section 109 of the Madras Port Trusts Act provided that nothing, in the said Act, would affect any power vested in the Chief Officer of Customs under any law for the time being in force. The Supreme Court observed that Section 49 of the Customs Act ....
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.... given up its claim against the Union of India and the Customs authorities, the Supreme Court, nevertheless, went on, in para 33 of the report, to opine, in that regard, thus: "The appellants' claim against Respondents 2 and 3 has no foundation in law and was rightly not pressed by the appellants' counsel. Respondent 3 is the Collector of Customs who, obviously, cannot be made personally liable to pay the demurrage. Respondent 2 is the Union of India against whom and Respondent 3, the appellant's claim is said to reside partly in the region of "contract or quasi-contract". We are unable to spell out any such basis on which the claim of the appellants could rest. The issuance of an incorrect "detention certificate" by the third respondent cannot also help the appellants to fasten the liability for demurrage on Respondents 2 and 3 on the ground of their negligence. As observed by the High Court, all the relevant facts were before the appellants who could, with reasonable care, have avoided the consequences flowing from the certificate issued by the third respondent." (Emphasis supplied) 31. Despite thus holding that the Board of Trustees was entitled to the....
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....onceded, by the Board of Trustees, that no demurrage could be charged for the period of detention, which was attributable to analytical testing. The Board of Trustees, nevertheless, pressed its claim for demurrage, for the period of detention, attributable to completion of Import Trade Control formalities. 34. Demurrage, as claimed, was paid by IGSC which, subsequently, sued for return of the said amount, on the ground that it was not liable to pay the same. The City Civil Court decreed the suit. The appeal, preferred there against to the High Court, by the Board of Trustees, was also dismissed, thereby confirming the decree passed by the City Civil Court. The matter was carried, by the Board of Trustees, to the Supreme Court. 35. During the pendency of proceedings before the High Court, the differential amount was deposited by the Board of Trustees. Before the Supreme Court, the Board of Trustees submitted that it was not seeking repayment of the said amount, but was concerned with a proper determination of the question of law, relating to its entitlement to claim demurrage. The question arising before it for consideration was framed by the Supreme Court as "whether the clai....
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....rrage as the rates imposed are under the authority of law the validity of which cannot be questioned. The claim cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is responsible." (Emphasis supplied) 39. The Supreme Court, therefore, reiterated the legal position, enunciated earlier in Aminchand Pyarelal (1976) 3 SCC 167, that, save and except for cases in which the delay was attributable to the Board of Trustees, the liability, of the importer, to pay demurrage, to the Board of Trustees, as per the prescribed scale of rates, for the period during which the goods, imported by it, were consigned to the custody of the Port Trust, could not be gainsaid. The decision, of the High Court, that the importer could not be held responsible for the delay not attributable to its own default, and that demurrage could not be imposed for the period during which the goods were detained for operation of the Import Trade Control Regulations was, therefore, held to be erroneous. Owing to the concession, made by the Board of Trustees before the Supreme Court, however, no recovery was directed. 40. The third pre-Gra....
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....a mandamus was sought, to the Port Trust, directing it to honour the detention certificates issued by the Customs authorities, and to permit release of the imported goods without payment of demurrage and without insisting of furnishing of a Bank Guarantee or Demand Draft. An interim order, in the same terms, was also sought, which was granted, vide order dated 17th June, 1986. 42. The Port Trust preferred a writ appeal against the order, dated 2nd April, 1986, passed by the learned Single Judge in WP No. 519 of 1986, which was dismissed vide order dated 26th June, 1986. Appeal No. 535 of 1986, preferred by the Port Trust against the order, dated 17th June, 1986 supra, in WP No. No 1424 of 1986, was also summarily dismissed on 26th June, 1986. 43. Detention certificates, covering the remaining three consignments imported by Jai Hind, vide Bills of Entry No 3133/221, 3133/222 and 3133/223, were received by the Port Trust from the customs authorities, on 3rd July, 1986. As a result, in accordance with the order, dated 17th June, 1986 supra, passed by the High Court, two of the five consignments were cleared, by Jai Hind, on 3rd July, 1986 and the remaining three consignments wer....
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....as not attributable to any fault or negligence on the part of the importer. The procedure for issue of detention certificates, by the Customs authorities, on the basis whereof the Port Trust could exempt the importer from the requirement of paying demurrage, was contained in Public Notice No 111, dated 29th July, 1985, issued by the Bombay Customs House. It was agreed, between the Customs authorities and the Port Trust, that no detention certificate would be issued by the Customs Department if there was a default on the part of the importer or exporter. Consequently, a defaulting importer, or exporter, would stand disentitled to any concession in the matter of demurrage charges, and would be bound to pay demurrage in accordance with the scale of rates charged at the docks, as fixed by the Port Trust. 46. Noting that, in its order passed in the writ petition filed by Jai Hind, the High Court had, while directing the Customs authorities to issue detention certificates, safeguarded the interests of the Customs authorities, by directing furnishing of a bank guarantee, by Jai Hind, in respect of the duty payable by it, the High Court had, insofar as the demurrage charges payable to t....
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....he then was) and N. Venkatachala, J. recording concurring opinions, with R. M. Sahai, J., dissenting. 51. Three Civil Appeals were decided, in Grand Slam4. In all the cases, the goods, imported by the concerned respondent, were consigned with the appellant-custodian (the International Airports Authority of India, referred to, hereinafter, as "the IAAI" in two of the appeals and the Central Warehousing Corporation, referred to, hereinafter, as "the CWC", in the third), and the orders, passed by the adjudicating authorities, confiscating the goods, were set aside by the Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as "the Tribunal") in appeal. Detention certificates had been issued, by the Customs authorities, in these cases, effectively directing the IAAI and the CWC not to charge demurrage, for the period during which the goods were in their custody. On the IAAI, and the CWC, refusing to abide by the said directions, the concerned importers approached the High Court, by way of writ petitions. The writ petitions were allowed by the High Court, which held that the IAAI and the CWC, being custodians of the Customs authorities, could not ignore the ....
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....empowered the IAAI to charge, with the previous approval of the Central Government, fees or rent for the use and enjoyment, by persons, of its facilities and other services at any airport. Section 37 of the said Act empowered the IAAI to make regulations, to give effect to the provisions of the Act, and sub-section (2)(d), thereof, specifically empowered the IAAI to make regulations for the storage of processing of goods in any warehouse established by it, and to charge fees for such storage or processing. 56. In exercise of the powers conferred by Section 37, the IAAI framed the International Airports Authority (Storage and Processing of Goods) Regulations, 1980 (hereinafter referred to as "the IAA Regulations"). Regulation 4 of the IAA Regulations empowered the IAAI to levy charges, including storage charges and demurrage, whereas Regulation 6 empowered the Chairman of the IAAI to, in his discretion, and for reasons to be recorded, waive demurrage in deserving cases. A separate policy, governing waiver of demurrage, had been framed by the IAAI. Inasmuch as the provisions of the IAA Act were similar to the provisions of the Major Port Trusts Act, 1963, as well as other Port Tru....
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....ove-extracted clause in the Public Notice, dated 30th April, 1986, by holding, unequivocally, that the provisions, whereunder the Public Notice purported to have been issued, i.e. sections 8, 33, 34 and 45 of the Customs Act, did not empower the Collector of Customs to issue such a Public Notice. It was held that these provisions did not entitle the Collector of Customs "to debar the collection of demurrage for the storage of imported goods"; neither did they "entitle him to impose conditions upon the proprietors of ports or airports before they can be approved as Customs ports or Customs airports". It was noted that Section 45 of the Customs Act, too, did not state that the person, to whose custody the imported goods were consigned, would not be entitled to recover charges from the importer, for such period as the Customs authorities directed. Paras 41 and 42 of the opinion of Bharucha, J, went on to hold thus: "41. The purpose of the Customs Act on the one hand and the Major Port Trusts Act and the International Airports Authority Act on the other hand are different. The former deals with the collection of Customs duties on imported goods. The latter deals with the maint....
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....to be approved thereunder to keep the goods coming into customs areas should relieve the owners (consignees) of such goods of their liability for payment of charges for such keeping or otherwise could be gathered from the provision in Section 63 of the Act, it is excerpted : "63. Payment of rent and warehouse charges. - (1) The owner of any warehoused goods shall pay to the warehouse-keeper rent and warehouse charges at the rates fixed under any law for the time being in force or where no rates are so fixed, at such rates as may be fixed by the Collector of Customs. (2) If any rent or warehouse charges are not paid within ten days from the date when they became due, the warehouse-keeper may, after notice to the owner of the warehoused goods and with the permission of the proper officer cause to be sold (any transfer of the warehoused goods notwithstanding) such sufficient portion of the goods as the warehouse-keeper may select." 59. When sub-section (1) above, does not relieve the owner of any warehoused goods to pay to the warehouse-keeper rent and warehouse charges at the rates fixed under any law for the time being in force or where no rates are so fix....
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.... any power in that regard either in the Act or the Rules or the Regulations. If condition (vii) of clause (d) of the Customs Public Notice No. 30/86 is regarded as that imposed by the Collector of Customs without authority of law, it having been imposed ultra vires his powers under the Act or Rules or Regulations, no Court can direct the IAAI to release the goods of the consignee without collecting from him demurrage charges levied according to its Regulations in respect of the goods, which it had taken care of as the custodian merely because there was a detention certificate of the Collector of Customs or his delegatee issued to the IAAI which had been approved as the custodian of such goods by the Collector of Customs under sub-section (1) of Section 45 of the Act." (Emphasis supplied) 61. Venkatachala, J., proceeds to conclude, in para 65, 66 and 68 of his concurring opinion, thus: "65. From the above decisions of this Court it becomes clear that an authority created under a statute even if is the custodian of the imported goods because of the provisions of the Customs Act, 1962, would be entitled to charge demurrages for the imported goods in its custody and make....
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....onferred upon him under the Act, its Rules or its Regulations and hence directions given by the Customs Collector or his delegatees to release the goods of importers or consignees without collecting demurrage charges from them cannot be enforced by Courts either against IAAI or CWC." (Emphasis and underscoring supplied) 62. Relying on Grand Slam4, the Supreme Court held, in Trustees of Port of Madras v. K. P. V. Sheikh Mohd Rowther & Co. Pvt Ltd 1996 (82) ELT 174 (SC), that the liability to pay demurrage charges, to the Port Trust, lay on the consignee of the goods, and not on the steamer agent. Trustees of Port of Madras v. Nagavedu Lungi 1995 (18) ELT 241 (SC) reiterated the position that the importerconsignee, or exporter-consignor, of goods could not avoid his liability to pay demurrage charges and other incidental charges, even if the goods were illegally detained by the Customs authorities. 63. U.O.I. v. Sanjeev Woollen Mills 1998 (100) ELT 323 (SC) is a decision, rendered by two Hon'ble Judges, which assumes importance, not so much for its own precedential value, as for the fact that it led to the subsequent judgement in Shipping Corporation of I....
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....any demurrage, and the Customs authorities were directed to issue the requisite certificate, as undertaken by this Court on 3rd April, 1991, for the said purpose. Detention certificate was, accordingly, issued by the Customs authorities on 15th October, 1996. 67. The Shipping Corporation of India (hereinafter referred to as "the Shipping Corporation"), being the custodian in respect of part of the goods, waived 96% of the charges claimed by it, but insisted, nevertheless, on payment of Rs. 56,43,470/-. This provoked SWM to file Contempt Petition 340/1996, before this Court. Vide order dated 19^th March, 1997, this Court granted one more opportunity, to the Union of India, to comply with the directions contained in the order dated 15th July, 1996 supra, further directing release of the goods, to SWM, within three weeks, and resolution, of the issue of payment of charges, by the Container Corporation of India and the Shipping Corporation, between themselves. 68. Though, pursuant to the aforesaid order, dated 19th March, 1997, the Union of India reported that the matter stood resolved with the Shipping Corporation, and delivery of the goods was also allowed by the Container Corp....
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....circumstances and the conduct of the appellants". 71. Though the Supreme Court itself clarified that the judgement, in Sanjeev Woollen Mills was passed in the peculiar circumstances of the case, and would not constitute a precedent, a subsequent appeal, preferred by the Shipping Corporation against M/s C. L. Jain Woollen Mills, was referred, by a bench of two Hon'ble Judges of the Supreme Court, to a bench of three Hon'ble Judges, under the impression that there was inconsistency between the decisions in Sanjeev Woollen Mills and Grand Slam. As the three-Judge bench, which was constituted to resolve the issue, went on to hold, unexceptionably, in Shipping Corporation of India Ltd v. C. L. Jain Woollen Mills, there was, actually, no such inconsistency, inasmuch as Sanjeev Woollen Mills was decided on its own peculiar facts, with the express clarification that the judgement would not constitute a precedent. 72. C. L. Jain Woollen Mills is, however, an important decision, not for that reason, but because it is erroneously cited, on numerous occasions, as an authority for the proposition that, where the detention of the goods, by the Customs authorities, is illegal, the burden, t....
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....ping Corporation was not made a party to the writ petition. The said order, dated 9th September, 1994, of this Court, was challenged, by way of SLP 5671/1995, which was dismissed, by the Supreme Court, vide order dated 13th November, 1995. As such, the order, dated 9th September, 1994, of this Court, became final, resulting in the liability of CLJ, if it ever existed, to pay demurrage charges, being completely extinguished. This has been clearly noted, by the Supreme Court, in para 4 of the report in C. L. Jain Woollen Mills thus: "But in view of the specific directions of the Delhi High Court in the writ petition filed by the importer of the goods, challenging the legality of the order of the Customs authorities in confiscating the goods and levying the penalty and that order having reached finality by dismissal of the special leave petition against the same filed by the Union of India, the liability of the importer to pay the demurrage charges ceases and that question cannot be reopened." 75. It needs to be noted, even at this stage, therefore, that the Supreme Court, in C. L. Jain Woollen Mills9 did not direct CLJ to pay demurrage charges, as it felt its discretion, ....
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.... 78. Having observed that, in view of the judgement and order, dated 9th September, 1994, of this Court in CWP 1604/1991, and the dismissal of SLP 5671/1995, preferred thereagainst, by the Supreme Court, on 13th November, 1995, there could be no question of CLJ being made liable to pay any demurrage charges, the Supreme Court delineated the larger question, arising before it, thus: "The next question that arises for consideration which is a larger issue, namely if the customs authorities do not release the goods and initiates proceedings and finally passes order of confiscation but that order was ultimately set aside in appeal and it is held by Court of law that the detention of the goods was illegal, then in such circumstances whether the career of the goods who had a over the goods for non-payment of duty, can enforce the terms and conditions of the contract against the customs authorities, making the said authorities liable to pay the demurrage charges." 79. The Supreme Court went on to reproduce Section 45 of the Customs Act and, after referring to the said Section, in juxtaposition with other provisions of the said Act, held that it was apparent, from the said p....
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....larified, could not be nullified by issuance of a detention certificate by the Customs Authorities, in the absence of any provision, in the Customs Act, authorizing issuance of such detention certificate. No such provision, it was observed, had been brought to the notice of the Supreme Court, as would enable the Custom Authorities to compel the carrier i.e. the Shipping Corporation, not to charge demurrage charges, the moment a detention certificate was issued. Inasmuch as the Shipping Corporation continued to retain a lien over the imported goods, so long as its dues were not paid, the Supreme Court held that the Customs Authorities had no power to restrain the Shipping Corporation from charging demurrage charges, and no such injunction would flow from the issuance, by the Customs Authorities, of a detention certificate. The right, of the Shipping Corporation, to charge demurrage charges, it was held, was owing to the occupation, by the imported goods, of the space of the Shipping Corporation. 84. The following words, of the Supreme Court, as occurring in para 7 of the report, merit reproduction: "7..... But that by itself, would not clothe the customs authorities with....
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....sition, in law, that (i) the responsibility, to pay demurrage, was on the importer, and (ii) the Customs authorities were not possessed of jurisdiction or competence to issue directions, restraining charging of such demurrage. 87. Grand Slam was relied upon, yet again, by the Supreme Court, in U.O.I. v. R. C. Fabrics (P) Ltd 2002 (139) ELT 12 (SC), though the main issue in controversy, in the said case, was different. Vide the said judgement, the Supreme Court decided three Civil Appeals. The respondent R. C. Fabrics (P) Ltd (hereinafter referred to as "RC Fabrics") imported a consignment, declared as 100% polyester fabric, vide Bill of Entry dated 16th August, 1990. The consignment was found to be misdeclared, with respect to dimensions as well as quantity. At the request of RC Fabrics, show cause notice was waived, and a formal adjudication order was passed, by the Assistant Collector, on 15th January, 1991, allowing release, to RC Fabrics, of the excess goods, on payment of redemption fine of Rs. 25,000/- and personal penalty of Rs. 5000/-. The said amounts, along with Customs duty of Rs. 43,657/-, on the quantity of goods allegedly in excess, were deposited....
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....age, of RC Fabrics, to the period prior thereto, i.e. from the date of storage of the goods till 15th January, 1991. This decision was also assailed, by the Union of India, before the Supreme Court, and decided by the judgement presently under discussion. 91. The Supreme Court set aside the decision, of the authorities below, that, in view of the order, dated 15th January, 1991, of the Assistant Collector, the imported goods could not be adjudicated upon, by the Collector, once again. For the purposes of the present controversy, it is not necessary to go into the reasoning, adopted by the Supreme Court, in that regard. What is relevant is that the Supreme Court also set aside the direction, of this Court, rendering the Customs authorities liable to pay demurrage, container charges and ground rent, to the CWC, for the period after 16th January, 1991, on the ground that the said direction was contrary to the judgement in Grand Slam4. Grand Slam4 was, thereby, reiterated and reinforced. 92. The next judgement of significance, chronologically, is Om Shankar Biyani v. Board of Trustees, Port of Calcutta 2002 (140) ELT 321 (SC). The appellant Om Shankar Biyani (hereinafter referred....
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....of Trustees could claim demurrage only till 2nd February, 1990, i.e. the date of order, of the High Court, permitting Biyani to remove the goods without payment of port charges. 96. The Board of Trustees appealed. In the appeal, vide interim order dated 16th November, 1991, Biyani was permitted to clear the goods on payment of demurrage till 2nd February, 1990, subject to furnishing of Bank Guarantee in the name of the Chairman of the Board of Trustees, covering the charges of the Board of Trustees from 3rd February, 1990, till the date of the Bank Guarantee. Biyani, however, neither paid demurrage till 2nd February, 1990, nor furnished the Bank Guarantee. The appeal was disposed of, by the Division Bench of the High Court, vide order dated 27th July, 2000, whereby the directions, of the learned Single Judge, permitting recovery of demurrage, by the Board of Trustees only till 2nd February, 1990, was set aside, and the Board of Trustees was held entitled to recover demurrage for the entire period during which the goods remained with it. 97. This order, dated 27th July, 2000, was challenged, by Biyani, before the Supreme Court. 98. The Supreme Court first extracted Section ....
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....ld that, as the Board of Trustees had applied, to the Division Bench of the High Court, for permission to sell the goods, and that, vide order dated 10th January, 1992, passed on the said application, the Division Bench had held that the cause of action had to be decided by the Board of Trustees itself, the Board of Trustees ought to have sold the goods at that stage, especially as it was aware, by then, that Biyani was not paying demurrage. Inasmuch as the High Court had permitted the Board of Trustees to take recourse to actions permissible in law, and sale was one of the courses of action permitted by the Major Port Trusts Act, the Supreme Court held that the Board of Trustees ought not to be allowed to charge demurrage charges after 10th January, 1992. This decision, however, obviously turns on the peculiar facts before the Supreme Court, and cannot be treated as constituting part of the ratio decidendi of the judgement in Om Shanker Biyani which, otherwise, reiterated and reinforced the principle that the Board of Trustees/custodian was entitled to charge demurrage for the period over which the goods were consigned to its custody. 102. The last judgement of the Supreme Cour....
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...., the following clear principles emerge: (i) The custodian has a lien over the imported goods, consigned to its custody. This lien may be statutory, as provided under the IAA Act, all the Major Port Trusts Acts, or contractual. It may also be relatable to Sections 170 and 171 of the Indian Contract Act, 1872. (ii) This lien entitles the custodian to retain hold of the goods, consigned to its custody, till all its dues, including ground rent and demurrage, are paid. (iii) The Customs authorities have no power, or the jurisdiction, to issue any instruction, to the custodian, requiring the custodian to waive, in whole or in part, the demurrage chargeable by it. Of course, this would be subject to any stipulation, in the statutory or other instrument governing the affairs of the custodian, to the effect that, where the detention certificate was issued by the Customs authorities, the importer would be entitled to waiver of demurrage, in whole or in part. In the absence of any such stipulation, statutory or otherwise, the Customs authorities could not, by issuance of the detention certificate, or by any other communication, direct the custodian not to charge de....
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.... to any other law for the time being in force. 107. There is no dispute about the fact that CELEBI is a "Customs Cargo Services provider", as defined in clause (b) of Regulation 2 of the Handling of Cargo Regulations. 108. Given the law, relating to the charging of demurrage, as it emerges from the decisions cited hereinabove, the highest that the petitioner could contend, therefore, is that there is no "other law for the time being in force", as would mitigate the effect of Regulation 6(1)(l) of the Handling of Cargo Regulations. 109. Per contra, in order to escape the rigour of Regulation 6(1)(l), the Customs Cargo Service provider - in the present case, CELEBI - would have to establish that its entitlement, to charge demurrage, is relatable to "any other law for the time being in force". 110. At this juncture, we may refer, profitably, to the judgment of the Supreme Court in Mumbai Port Trust v. Shri Lakshmi Steels 2017 (352) ELT 401 (SC), in which note, of Regulation 6(1)(l), has been taken. The respondent, before the Supreme Court, imported cold rolled sheets and coils. The DRI directed the consignment to be placed on hold, on 14th December, 2015. On 28th December,....
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.... ordered that SLS was not liable to pay any demurrage, which the Port Trust was directed to waive. Detention charges were directed to be borne by the DRI, or the Customs authorities. 114. The Supreme Court delineated the two issues, arising before it for consideration, as "(1) whether any direction could be given to the Mumbai Port Trust to waive the demurrage charges and (2) whether the liability to pay the demurrage/detention charges in respect of the imported goods could be fastened upon the DRI/Customs Authorities." 115. Noting that the Mumbai Port Trust was a statutory authority, functioning under the aegis of the Major Port Trusts Act, 1963, the Supreme Court, at the outset of its reasoning, extracted various provisions of the Major Port Trusts Act and the Customs Act and proceeded, thereafter, to refer to the various judgements, rendered by it earlier, to which allusion already stands made hereinabove. On issue (1) supra, as framed by it, the Supreme Court went on to answer the issue in the negative, i.e. by holding that the Mumbai Port Trust was entitled to charge demurrage, for the following reasons: (i) Section 160(9) of the Customs Act cl....
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....rsement from the Customs authority". In this context, the Supreme Court also observed that charges of mala fide were serious, and required a high degree of proof. 117. In these circumstances, the Supreme Court effectively answered both the issues, framed by it, against the importer, holding that (i) the Mumbai Port Trust was entitled to charge demurrage and (ii) the liability, to pay the said demurrage, was on the importer. On facts, the Supreme Court also held that no such factors could be said to exist, which would justify transference, of the said liability, on to the Customs authorities. It was observed that, even if there was some delay on the part of the Customs authorities, equally, there was delay on the part of the importer as well. The Supreme Court, however, clarified that the importers were free to approach the Port Trust, under Section 53 of the Major Port Trusts Act, seeking extension and revision of demurrage and other charges, and opined that the Board of Trustees could take a sympathetic view in the matter. 118. The Supreme Court also held - though this may not be strictly relevant for the present proceedings - that, insofar as the detention charges, payable ....
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....ted vide Notification, in the Official Gazette, issued by the Central Government. Section 13(1) transferred to, and vested in, the AAI, the undertakings of the IAAI and National Airports Authority. All rights, powers, authorities and privileges, earlier vested in the IAAI, stood transferred, by sub-section (2) of Section 13, in the AAI. (iii) Section 12 of the AAI Act stipulates that it shall be the function of the AAI, to manage the airports. Clause (g) of sub- section (3) of Section 12 specifically empowers the AAI to establish warehouses and cargo complexes, at airports, for the storage and processing of goods. (iv) Section 42 of the AAI Act empowers the AAI to make regulations, specifically for the storage of and processing of goods in any warehouse established by the AAI under Section 12(3)(g), and for charging of fees for such storage and processing. In exercise of the said power, the AAI notified the Airports Authority of India (Storage and Processing of Cargo, Courier and Express Goods and Postal Mail) Regulations, 2003 (hereinafter referred to as "the AAI Regulations"), which came into effect on 13th June, 2003. (v) "Cargo Handling Agency" is def....
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....ay down the procedure and policy for waiver of demurrage charges" under the said Regulations. (xi) Section 12A of the AAI Act empowers the AAI to, in public interest or the interest of better management of airports, "make a lease of the premises of an airport (including buildings and structures thereon and pertaining thereto) to carry out some of its functions under section 12 as the Authority may deem fit". The proviso, to the said sub- section (1), however, clarifies that the said lease "shall not affect the functions of the Authority under section 12 which relates to air traffic service or watch and ward at airports in civil enclaves". Functions, other than air traffic, and watch and ward services can, therefore, be leased, by the AAI. (xii) Sub-section (4), of Section 12A, of the AAI Act, reads thus: "(4) The lessee, who has been assigned any function of the Authority under sub-section (1), shall have all the powers of the Authority necessary for the performance of such functions in terms of the lease." (xiii) In exercise of the powers conferred by Section 12A of the AAI Act supra, the AAI entered into an Operation, Management and Development....
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....l Services; (iii) determine, demand, collect, retain an appropriate charges from the users of the Airport in accordance with Article 12 hereto; and (iv) Contract and/or sub contract with 3rd parties to undertake functions on behalf of the JVC, and sub- lease and/or license the Demise Premises in accordance with Article 8.5.7." (Emphasis supplied) (xv) It was, Mr. Tiku points out, in exercise of the power conferred by Article 2.1 of the OMDA, that CELEBI was assigned the function of managing cargo, vide Concession Agreement dated 24th August, 2009, executed between the DIAL and CELEBI. The introductory paras of the said Agreement contained, inter alia, the following recitals: "WHEREAS A. The Airport Authority of India and DIAL have entered into an Operation, Management and Development Agreement dated April 4, 2006 ("OMDA") whereby AAI has granted to DIAL the exclusive right and authority during the term of the OMDA (including any renewal thereof) to operate, maintain, develop, design, construct, upgrade, modernise, finance and manage the Airport. ***** B. Pursuant to the terms of the OMDA, DIAL is, inter alia, entitle....
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....ng CELEBI not to charge any demurrage from the petitioner. 124. Mr. Tiku also draws our attention to clauses 6.1.2 and 6.1.3 of the Concession Agreement, regarding development and up-gradation of the cargo terminal, which read thus: "6.1.2 The Concessionaire shall at its own cost and responsibility upgrade, modernize, finance, operate, maintain and manage the Cargo Terminal including but not limited to providing; maintaining and upgrading all such equipments and materials necessary for operating, maintaining and managing the same for rendering the Services. 6.1.3 The Concessionaire shall, while upgrading, modernizing, financing, operating, maintaining and managing the Cargo Terminal, take into consideration and be responsible for compliance with all relevant provisions of the Applicable Laws, parameters set out in the Business Plan and obtain all such Approvals as may be necessary for the implementation of the Concession including but not limited to complying with the relevant development standards as stipulated under the OMDA." For all the aforesaid reasons, Mr. Tiku submits that the entitlement, of CELEBI, to recover demurrage charges, from the petitioner,....
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....solution of the government, fixing dearness allowance was held, in State of Madhya Pradesh v. G.C. Mandawar AIR 1954 SC 493, to constitute "law". As employed in Article 13 of the Constitution of India, it stands authoritatively held, in Ram Krishna Dalmia v. Justice S.R. Tendolkar AIR 1958 SC 538, that the expression "law" includes any notification or order. To the same effect, is Narender Kumar v. U.O.I. AIR 1960 SC 430. A scheme, drawn for running motor carriages, was held to constitute "law", in H.C. Narayanappa v. State of Mysore AIR 1960 SC 10730. In Sant Ram v. Labh Singh AIR 1965 SC 3314 it was held that the expression "law" means any ordinance, order, bye-law, rules, regulations, notification, custom or usage, having, in the territory, the force of law. In Raj Kumar Narsingh Pratap Singh Deo v. State of Orissa AIR 1964 SC 1793, the Supreme Court held that "law generally is a body of rules which had been laid down for determining legal rights and regulations which are recognised by courts". 132. The expression "law" and, consequently, the expression "any other law for the time being in force" are, therefore, required to be compendiously interpreted, rather than infusing, ....
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....ctful concurrence. 139. Responding to the aforesaid submissions of Mr. Tiku, Mr. Priydarshi Manish, learned counsel for the petitioner draws our attention to a communication, dated 16th May, 2019, addressed by the Deputy Commissioner of Customs to CELEBI, informing CELEBI that the case in issue, covered by Bills of Entry, dated 3rd May, 2019, were required to be shifted to the office of the Commissioner of Customs. Having carefully read the said communication, we are, however, of the opinion that it can be of no substantial assistance, insofar as the petitioner's case is concerned. The said communication merely conveys, to CELEBI, the fact that the seized goods were to be shifted to the office of the Commissioner. Such a communication cannot, in our view, result in compulsory abandonment, by CELEBI, of its right to recover demurrage. Indeed, as held by the Supreme Court in the authorities already cited hereinabove, the Customs authorities have no jurisdiction, whatsoever, to injunct CELEBI from recovering the demurrage charges, otherwise recoverable by it in law. 140. Mr. Manish also referred us to communications, dated 13th March, 2019, from the Chief Commercial Officer of D....
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....n judicial forum in respect of waiver of demurrage charges shall be settled as per the assurance given in your letter no. DIAL/2017-18/Comm Cargo/2014 dated 13/03/2019 and in the meeting held on 13/3/2013. Further Custodian shall not claim any demurrage charges in compliance of regulations 6(l) of Handling of Cargo in Customs Areas Regulations, 2009 which read as follows:- "subject to any other law for the time being in force, shall not charge any rent or demurrage on the goods seized or detained or confiscated by the Superintendent of Customs or Appraiser or Inspector of Customs or Preventive officer or examining officer, as the case may be" It is clear that the aforesaid "undertaking" by DIAL, to the effect that no demurrage would be charged by the custodian, for the period covered by the detention certificate, was with respect to four specific cases, relating to (i) Md. Salim Chaiwala, (ii) M/s. Nanda Gum House, (iii) M/s. Overseas and (iv) M/s. Afzal Khan. The undertaking, therefore, has no application, whatsoever, to the petitioner before us and we are not, therefore, required to express any opinion regarding the said undertaking, or the effect, in law, thereof. ....
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....ctors; (iii) the cost for improving efficiency; (iv) economic and viable operation of major airports; (v) revenue received from services other than the aeronautical services; (vi) the concession offered by the Central Government in any agreement or memorandum of understanding or otherwise; (vii) any other factor which may be relevant for the purposes of this Act: Provided that different tariff structures may be determined for different airports having regard to all or any of the above considerations specified at sub-clauses (i) to (vii); (b) to determine the amount of the development fees in respect of major air ports; (c) to determine the amount of the passengers service fee levied under rule 88 of the Aircraft Rules, 1937 made under the Aircraft Act, 1934(22 of 1934); (d) to monitor the set performance standards relating to quality, continuity and reliability of service as may be specified by the Central Government or any authority authorised by it in this behalf; (e) to call for such information as may be necessary to determine the tariff under clause (a); (f) to perform such other....
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....tions, the High Court held that the service provider was not entitled to charge any demurrage, for release of the goods. However, the High Court limited the immunity, to CCIL, from the requirement of paying the demurrage for the period till 15th January, 2015. It was the Civil Appeal of CCIL, against the limiting of the relief, granted to it by the High Court, for the period till 15th January, 2015, which came to be decided by the judgment under discussion. 156. Having noted these facts, the judgment of the Supreme Court records, in para 5 of the report, thus: "5. We may record that insofar as the respondents are concerned, they have accepted the judgment and, thus, there is no challenge to the findings of the High Court that the goods were wrongly detained/seized by the Customs Authorities. It is in this backdrop that the question is to be decided as to whether relief of non-payment of charges should have been restricted till 15-1-2015." 157. It is clear that that the Supreme Court was not concerned with the entitlement, or otherwise, of the service provider, to charge demurrage. The High Court had held, on this issue, in the negative, and the service provider had n....
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....fore, Trip Communication Private Ltd.25, if anything, underscores the position that, where the importer has suffered an order of confiscation, fine and penalty, it would not be entitled to waiver from demurrage, as per the waiver policy of CELEBI. 163. Inasmuch as Mr. Manish has sought to contend that the waiver policy, on which Mr. Tiku relied, and to which reference is contained in Trip Communication Private Ltd.25, was relatable to the IAAI Regulations, 1993, we do not propose to opine, any further, on this aspect. 164. The reliance, by Mr. Manish, on the decision in Delhi International Airport Private Ltd.26 is also, in our view, counterproductive, as is apparent from paras 17 to 20 of the report, which may be reproduced thus: "17. In the present case, the Court notices that the power to frame regulations is located in Section 42(1) and (2) of the Airports Authority of India Act, 1994, which, by clause (d) (of sub-section [2]) provides the following specific regulation making power: "(d) the storage or processing of goods in any warehouse established by the Authority under clause (g) of sub-section (3) of section 12 and the charging of fees for such stor....
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....ue directions (Section 40). In the event DIAL is of the view that customs authorities' directions to it to not charge demurrage are unwarranted, it can seek guidance and directions in that regard, from the Central Government. In these circumstances, the grievance that Regulation 6 can potentially render DIAL's functioning unviable and result in losses to it, has to fail." 165. In the afore-extracted paragraphs, this Court has, in its judgment in Delhi International Airport Private Ltd., confirmed that (i) the AAI was empowered, under Section 42(2)(a) of the AAI Act, to frame regulations for the storage of processing of goods in any warehouse, established by the AAI and for charging of fees by AAI for such processing, and (ii) the duty, not to charge demurrage, as contained in Regulation 6(1)(l) stood statutorily subordinated to any other law for the time being in force. 166. It was for these reasons that the challenge to Regulation 6(1)(l), by DIAL, was repealed. 167. The contention, of Mr. Manish, that, by virtue of Regulation 6(1)(l) of the Handling of Cargo Regulations, CELEBI is not entitled to charge any demurrage from the petitioner, would, ....